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Like our children, we love shiny new toys. We’re suckers for the latest and the greatest. As a nation, we tolerate — and often prefer — disposable substitutes for reusable items. By the same token, we rarely measure progress by yardsticks that endure. We’re just too impatient. So it is with public procurement. The 1990s witnessed a spirited wave of reforms, many of which were successful. Others, despite the best of intentions, remain stuck in the quagmire of inadequate implementation. The best reforms welcomed new entrants into a more-open, competitive procurement system, in which certain rules of the game are now easier to understand. The most poorly implemented led to confusion, inequity, and diminished public trust in government. Incremental procurement reform is with us for the foreseeable future. But how should we decide what to keep and what to disregard? The answer lies in metrics — with benchmarks, or measures of success. The problem with metrics, however, is this: It’s hard to measure success if you don’t know what you want. Consider three core values that form a solid foundation for any public procurement system: competition, integrity, and transparency. (For a more extensive discussion of these, and related, goals, see professor Schooner’s 2001 article, “Fear of Oversight: The Fundamental Failure of Businesslike Government” in the American University Law Review.) It’s not an exclusive list. We recognize the importance of other legitimate aspirations for a procurement system, such as efficiency, customer satisfaction, and best value. Nor do we discount the importance of uniformity and risk avoidance. Finally, we acknowledge that, for many governments, the procurement system serves as a vehicle for wealth distribution. (See, e.g., professor Schooner’s 2002 article, “Desiderata: Objectives for a System of Government Contract Law” in the British Public Procurement Law Review.) It’s hard to prioritize, but, ultimately, we choose to elevate these three goals. Others, such as Harvard professor Steven Kelman, who served as administrator of the Office of Federal Procurement Policy in the mid-1990s, might argue that we are naive to choose as goals what are, in effect, constraints. There is an attractive logic to the suggestion that the government’s buying regime should have the loftier aims of serving the government’s current mission, whether stated in terms of increasing customer satisfaction or achieving value for the money spent. But that misses the point: Core values must be a given, a central unifying theme of all regulatory reform. The federal procurement system involves an eclectic host of constituencies. Players include requirement generators (agency heads, program managers, end users), buyers (procurement executives, contracting officers, contract administrators, quality assurance representatives), sellers (contractors, subcontractors), policy-makers (legislators, regulation writers), overseers (accountants, auditors, inspectors general), and, of course, the public (taxpayers, media, interest groups). Each constituency values different outcomes and, accordingly, might choose varying metrics. But lawyers and regulators, at least, should return, again and again, to these core values: competition, integrity, and transparency. Unfortunately, applying these three basic measures to recent procurement reforms suggests an uneven record. A brief illustration may help: The proliferation of government purchase cards (essentially federal credit cards), spurred by the $2,500 micro-purchase threshold, may have been the most dramatic of the 1990s procurement reforms. Permitting government employees to buy basic consumer products through normal retail channels, without an elaborate regulatory process, seemed logical and efficient. But this flexibility came at the expense of competition, integrity, and transparency. As implemented, purchase card usage rendered noncompetitive nearly 25 million transactions worth more than $13 billion in 2001, decreased the amount of information on government spending, and eventually led to an alarming litany of unauthorized purchases and abuses. A deluge of General Accounting Office and inspector general reports eventually prompted Congress and the Office of Management and Budget to demand appropriate controls. Our colleague, professor emeritus Ralph Nash Jr., said it best: “Giving purchase cards to lots of people was a good idea, but having no one check the purchases was weird.” HARDER TO SEE Let’s focus specifically on the core value of transparency — the concept that the rules by which the procurement system acts, and its actions, should be fully apparent to all interested parties. On one hand, current technology permits a previously unimagined level of transparency. Anyone can access procurement laws ( www.findlaw.gov) and regulations ( www.arnet.gov/farand www.regulation.gov); ads for larger, competitive procurements ( www.fedbizopps.gov ); and even adjudicative rulings ( www.gao.gov). The public has easy access to information on where the government spends its $200-plus billion procurement budget each year ( www.fpdc.gov/fpdc/fpdc_home.htm). Extensive, if aggregated, information is available on sales under some of the most important contracting vehicles, such as the General Services Administration schedules ( www.fss.gsa.gov). In many other ways, however, the 1990s reforms drove much of the procurement system underground. (See our January 2003 article, “Model Behaviour? Anecdotal Evidence of Tension Between Evolving Commercial Public Procurement Practices and Trade Policy,” in the British journal International Trade Law & Regulation.) As a result of those reforms, billions of dollars annually now pass through a largely opaque process. Agencies acquire an ever increasing volume of supplies and services through GSA schedules and other “indefinite delivery/indefinite quantity” (ID/IQ) contracts. Agencies order from these vehicles by issuing purchase orders, which are rarely publicized, so potential competitors (and citizens) never learn of them. No one doubts that today’s flexible ID/IQ contracts are more efficient than the transactions they replaced. We wonder, though, why so few policy-makers weigh the claimed gains in efficiency against the diminished transparency — and against the additional costs of a less competitive procurement system. The three core values are related, you see. Transparency helps ensure integrity, which, in turn, promotes competition. Similarly, notifying and debriefing unsuccessful offerors instills confidence that the rules have been followed, so that disappointed firms return to compete for future contracts. But recent reforms that spurred ID/IQ and GSA schedules activity seem to ignore transparency concerns. Having used technology to open up so much of the procurement system, it’s surprising that the government has not used it to restore transparency to ID/IQ and GSA schedules contracting. Some ID/IQ contracts domake substantial opportunity and award information available (for example, the Commerce Department’s COMMITS contract is detailed at commitsbop.osec.doc.gov/UsCommercePage/UsCommercePage.htm). But previously, the government routinely published all opportunity and award information for contracts over $25,000. By not making the same information available in the ID/IQ context, the government has limited both transparency and competition. As a result of criticism, Section 803 of the 2002 defense authorization act has required the government to provide broader publicity and competition for a more limited category of contracts — Defense Department services orders over $100,000 — when purchases are made through the GSA schedules or ID/IQ contracts. The Section 803 rules, while laudable, are only an interim solution to much broader problems. WHEN GOVERNMENTS COOPERATE Transparency in GSA schedules became even more important with the cooperative purchasing authority provided in the E-Government Act of 2002. Section 211 of the act requires the GSA to open up the information-technology-related Schedule 70 to state and local governments. In other words, state and local governments are permitted to buy information technology goods and services directly from federal GSA schedule contractors. In essence, the GSA facilitates its schedule contractors’ access to numerous government markets at the federal, state, and local levels. This represents a tremendous boon to thousands of contractors, and will give state and local government much broader access to world-class technology. Cooperative purchasing may prove less successful, however, if the government cannot ensure transparency and competition in the schedules marketplace. Critics fear that the GSA schedules will evolve into a pipeline for hidden, sole-source sales to state and local governments, much as the federal schedules threatened to become before the current wave of reforms. If that occurs, state and local governments will merely inherit a problem that the federal government has struggled for years to solve. One simple solution would be to publicize data from every GSA schedules sale, or at least every large sale. For example, the government could insist that all schedules sales be made through the GSA’s online catalog ( www.gsaadvantage.gov). The government could then publish all sales data much as it now aggregates federal data through the Schedules Sales Query ( www.fss.gsa.gov). Instant disclosure of sales volume and pricing would ensure transparency and boost competition. Of course, it might also raise concerns among vendors, whose prices and customers would become immediately visible to competitors. Again, unfortunately, the pendulum is currently swinging in the opposite direction, away from this sort of instant transparency. A proposed rule would discourage agencies from disclosing competing contractors’ unit prices during debriefings for commercial-item acquisitions. Moreover, the proposal hints that, soon, unit prices may not be disclosed in anydebriefings. This trend does not bode well for traditional procurement values. TO BUNDLE OR NOT TO BUNDLE As suggested above, in stressing three core values — competition, integrity, and transparency — we appreciate that efficiency also must remain a fundamental concern in shaping federal procurement policy. For this reason, we were startled by the White House’s recent anti-bundling initiative. “Bundling” occurs when agencies consolidate or aggregate multiple procurement needs into larger contract vehicles. Aggregation of purchases permits the government to reap economies of scale (for the same reason that Costco and Sam’s Club sell in quantity). Consolidation also reduces burdens on an understaffed acquisition work force because fewer contracts must be drafted, awarded, or administered. Conversely, bundling frequently reduces opportunities for small businesses to compete for government work because the resulting contracts are larger. Thus, bundling arguably restricts competition even as it increases efficiency. Shortly before last year’s critical midterm elections, the Bush administration announced an initiative to boost small business’s share of federal procurement ( www.acqnet.gov/Notes/contractbundlingreport.pdf). What the proposed addition to the Federal Acquisition Regulation does is to “solve” the bundling problem by adding a layer of bureaucracy. The proposed rule makes no effort to assess whether any particular bundling would restrict competition for a given agency requirement. Instead, building upon existing regulations, it merely asks whether a new, bundled contract would preclude small-business competition. If the procurement precludes the participation of small businesses, a separate review would be undertaken. The goal does not seem to be to increase competition. Rather, the rule takes agencies to task if bundling precludes small businesses from receiving their “fair share” of awards (based upon a number arbitrarily chosen by Congress). The purpose — to utilize the procurement process to distribute wealth — is clear. Responding to bitter political complaints from the small-business community, the rule serves to transfer contracts from large to small firms. Ironically, the proposed anti-bundling rule highlights the importance of enduring core values. If procurement reform cannot be measured against touchstone values — competition, integrity, transparency, and, yes, efficiency — reform randomly ebbs and flows with the ever-changing political tides. Losing sight of core values makes it impossible to gauge the burdens of politically driven initiatives. That’s a shame. As our government acquisition system continues to mature, core values play a necessary role in guiding reform. Experience teaches us that, without a guide, we’re lost. Christopher R. Yukins is associate professor of government contracts law, and Steven L. Schooner is associate professor and co-director of the government contracts program at the George Washington University Law School. They can be reached at [email protected]and [email protected], respectively.

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